Ellison Commends Introduction of Mortgage Reform & Anti-Predatory Lending Act

Press Release

Ellison Commends Introduction of Mortgage Reform & Anti-Predatory Lending Act

Key Ellison Provisions Included

Congressman Keith Ellison (D-Minneapolis) today commended Chairman Barney Frank (D-Massachusetts) on the introduction of "The Mortgage Reform and Anti-Predatory Lending Act of 2007, H.R. 3915." This far-reaching legislation contains a number of the provisions similar to Ellison's "Fairness for Homeowners Act of 2007" introduced this past summer.
"This comprehensive bill brings sweeping and much-needed changes to the mortgage market. It will reform many of the flaws in the current system that has led to the mortgage foreclosure crisis," Congressman Ellison stated.

"I welcome the Chairman's effort and am pleased his bill includes portions of the legislation I introduced earlier this year which was drawn from the Minnesota model passed by the Minnesota Legislature with widespread bi-partisan support and signed into law by the Governor," the Fifth District Congressman stated. Among the portions are:

* Requiring greater documentation of income as well as reasonable ability to repay
* Prohibit steering of loans when a net tangible benefit to the consumer does not exist
* Requires a large surety bond and proof of net assets for mortgage originators
* Eliminates pre-payment penalties except for a very small window of time for individuals who want to refinance an adjustable rate mortgage

"I am particularly pleased to see that as a result of the Financial Services Committee hearing we held in Minneapolis on August 9, 2007, strong protections were added to the bill to prevent renters from being evicted from foreclosed properties. This is particularly important to Minneapolis residents who have felt the impact of these foreclosures through no fault of their own," Ellison said.

Predatory mortgage lending has become a plague to our nation's families and communities. The city of Minneapolis has experienced a 100% increase in the number of foreclosures from one year ago. The first three months of this year there have been 687 foreclosure sales with 50% of them happening in the neighborhoods of North Minneapolis. Just this past weekend 300 lost to foreclosure went up for community sale. "These are not just homes for sale; they are families whose absence will ripple through their communities in property value reductions, crimes rates, small business failures and renter evictions," Ellison said. It has been reported that similar sales are scheduled for every weekend for the next four weeks. These startling statistics reflect the magnitude of the threat facing our communities directly caused by predatory lenders and unsound practices in the mortgage lending market.

"The need for renters' protection was brought to my attention at a hearing Representative Ellison organized in Minneapolis last August. It is unfair to punish renters for the mistakes of others, and the protection of tenants needs to be included in comprehensive reform," Chairman Barney Frank stated.

"The Mortgage Reform and Anti-Predatory Lending Act of 2007" reforms three key areas of the mortgage lending industry. First H.R. 3915 creates a new licensing structure for mortgage bankers to ensure that they are licensed and held accountable for the quality of the loans they originate. Second, the bill creates a new minimum standard for mortgages with protections to ensure that all loans are properly underwritten and eases the way for high quality or "qualified mortgages" to be securitized. This is especially important because it ensures continued liquidity in the mortgage securities market. The final section of the bill expands the definition for "high-cost mortgages," greatly increasing the protections available for consumers if they decide to select a sub-prime mortgage.

Source